Critical Success Factors (CSFs) for Small Medium Enterprises (SMEs): An Empirical Study in the UK Chemical Distribution Industry.

Small and medium-sized enterprises (SMEs) have long been established as an effective mechanism to generate employment and promote economic growth. However, there is still no unifying theory on SMEs success with knowledge development being more fragmented than cumulative. Even though business literature features a wide range of critical success factors (CSFs), their importance appears to be relative and varies with the business environment, that is the country and industry SMEs operate in. Therefore, developing a better understanding of the factors that contribute to small business success, especially within a specific country and industry context, becomes crucial. Notably, SMEs have a strong presence in the UK chemical distribution industry and play an important role in its overall growth and performance. The chemical distribution sector is a developing, well-established, fragmented, subject to strong consolidation, significant part of the chemical industry and a major contributor to the UK economy and employment. However, there is limited bibliography and research both on an academic and a professional level on this industry and equally on the small businesses operating in it, creating a need for more empirical research. Therefore, identifying and exploring the critical factors underpinning SMEs success in the specific industry becomes of great importance. The aim of this study is to identify the factors critical to the success (CSFs) and sustainable growth of SMEs in the UK chemical distribution industry. Following an in-depth literature review, twenty two (22) factors critical to small business success are identified and their impact is investigated. These are categorised in entrepreneurial (relating to the personal characteristics of the owner/manager), enterprise (relating to the firm) and business environment (external) factors. This research follows a positivistic philosophy, is deductive in its approach, uses a concurrent embedded mixed methodology and utilises a survey strategy involving the use of self-administered questionnaires. The survey is based on the opinions of owners and very senior managers (Managing Directors, Directors, CEOs and CFO’s), an approach extensively used by other researchers. A total of 180 SMEs fulfilling the criteria of this study are identified in the UK chemical distribution industry with 118 owners/managers participating, generating a very satisfactory response rate of 65.5%. This study establishes a positive relationship between eight (8) factors and SMEs success in the UK chemical distribution industry. Regulatory Compliance, Entrepreneurial Orientation, Customer Relations Management, Market and Product development, Prior Work Experience and Management Skills, Human Capital, Economic Environment and Strategic Planning are, in order of importance, the critical success factors for the specific industry. Findings strongly suggest that success is a multidimensional phenomenon, where both firm-internal and firm-external factors need to be optimal simultaneously. Considerable variations between SMEs in this industry based on their size are also found, suggesting that these are not a homogeneous group and as such different strategies are needed for different sized businesses. This research addresses the gap in small business success in the UK chemical distribution industry as it is the first study to provide an integrative perspective of CSFs for SMEs in this sector. The original and significant contribution of this thesis lies with the identification of the factors critical to the success and sustainable growth of UK chemical distribution SMEs. This study does not only fulfil the need for more empirical studies in the specific research area but also contributes to the knowledge and expands the literature on SMEs success and entrepreneurship. It further improves the understanding of the chemical distribution industry and of the small businesses operating in it. This study also provides guidelines and recommendations to various stakeholders so as to improve their strategy formulation and decision-making process in order to support chemical distribution SMEs in being successful, achieving sustainable growth and strengthening them against failure.